The cytosine analogue decitabine alters hematopoietic differentiation. For example, decitabine treatment increases self-renewal of normal hematopoietic stem cells. The mechanisms underlying decitabine-induced shifts in differentiation are poorly understood, but likely relate to the ability of decitabine to deplete the chromatin-modifying enzyme DNA methyltransferase 1 (DNMT1), which plays a central role in transcription repression. HOXB4 is a transcription factor that promotes hematopoietic stem cell self-renewal. In hematopoietic precursors induced to differentiate by the lineage-specifying transcription factor Pu.1 or by the cytokine granulocyte-colony stimulating factor, there is rapid repression of HOXB4 and other stem cell genes. Depletion of DNMT1 using shRNA or decitabine prevents HOXB4 repression by Pu.1 or granulocyte-colony stimulating factor and maintains hematopoietic precursor self-renewal. In contrast, depletion of DNMT1 by decitabine 6 hours after the differentiation stimulus, that is, after repression of HOXB4 has occurred, augments differentiation. Therefore, DNMT1 is required for the early repression of stem cell genes, which occurs in response to a differentiation stimulus, providing a mechanistic explanation for the observation that decitabine can maintain or increase hematopoietic stem cell self-renewal in the presence of a differentiation stimulus. Using decitabine to deplete DNMT1 after this early repression phase does not impair progressive differentiation. Mol Cancer Ther; 9(6); 1536–43. ©2010 AACR.